While most family offices share a common purpose to help families sustain their wealth across multiple generations, the structure, size and activities of family offices can be vastly different.
One of the key factors in helping a family achieve the vision for their wealth is the preparation and education of the rising generation. That is where the right family office can help. Jill Shipley and Whitney Webb of Cresset offer the following advice on how family offices can educate, engage and empower younger family members:
- Take a multigenerational approach: Though the senior generation may have generated or historically controlled the family’s wealth, it is critical that a family office develops relationships with all generations of a family. It is foundational to educate the rising generation to get to know them deeply, help them define their goals and support them along the way. Taking a multigenerational approach can align those younger family members on the purpose of the wealth and help ensure they have a voice.
- Strive for inclusivity: Beyond getting to know each family member individually, it is also helpful to bring the family together. Family offices should encourage a family to gather for a facilitated family meeting at least once a year and ensure that all or a portion of it is inclusive of all family members. These meetings can provide an opportunity for the family to bond, have fun, learn together and make shared decisions.
- Begin with the why: Financial acumen is a key part of educating a responsible heir, but don’t start there. Instead, start with the “why”. Why is the family where it is today? Educate the rising generation about the story of where the money came from. What were / are the hopes and dreams of the wealth creators? What are the underlying values of the family and individual family members? Take the time to educate the younger generations on how to have a healthy relationship with money. Explore how to navigate the social and emotional implications of being an inheritor.
- Step back when needed: As capable as a family office may be, it should not do everything for the younger generations of a family. For example, if a family office handles all banking, credit cards, budgeting and bill pay, there are few financial lessons to be learned. A family office can provide advice and guidance, but the younger members of a family should learn to manage their own financial affairs. Self-sufficiency is an important educational lesson in its own right and should be framed in an exciting and positive way. Most young people yearn for independence, and allowing them to manage their personal finances can be particularly empowering.
- Make it fun: Taxes, investing and spreadsheets may not be the most interesting topics to some family members. Therefore, a family office should find ways to engage and educate each generation in a way that brings finances to life. A family office can use age-appropriate games and activities to make learning fun and interactive for all generations, taking into account concepts like investing, risk tolerances, diversification, budgeting, financial statements and business plans. Making learning fun for all generations can help them keep a curious and adaptable mindset.
In conclusion, with the right expertise, creativity and outside perspective, a family office can help setup the rising generations of a family for success in achieving a shared vision for lasting wealth.